Think for a minute about how you used to book your holidays, buy your music, find an address or select insurance – 10 or even 5 years ago? Do you even bother to search for things these days or do you just rely on the recommendations from your network via Facebook, Twitter, Zemanta or even Amazon?

These prolific and radical changes are not limited to social and consumer interactions on the internet. They also impact the nature, shape and conduct of business both internally and externally.

Companies are increasingly working in networks, whether they be loosely coupled or tightly integrated because of technology and the globalisation that technology has brought with it. Those networks are essentially virtual entities, and this trend will accelerate over the coming years. To be in or join a network, people need insight and connections, as well as appropriate processes capable of supporting various business needs across the virtual entity. That signals fundamental shifts in the way people do business and the underlying business models.

This was one of the issues Leo Apotheker (co-CEO and a member of the Executive Board of SAP AG) and Andrew McAfee discussed during an interview with Charlie Rose earlier this week.

It echoes the message from Pisano & Verganti in their article Which Kind of Collaboration is Right for You? (Harvard Business Review December 2008):

In an era when great ideas can sprout from any corner of the world and IT has dramatically reduced the cost of accessing them, it’s now conventional wisdom that virtually no company should innovate on its own. … [But] greater choice has made the perennial management challenge of selecting the best options much more difficult. … [How] open or closed should your firm’s network of collaborators be? And who should decide which problems the network will tackle and which solutions will be adopted?

Those opportunities and challenges are equally applicable within organisations, with changes affecting the way people are now able to work together and the nature and style of management. Everything happens and needs to happen so much faster just so businesses can stay in the same (market) position and not loose ground to competitors. But whilst the technology is there to expedite work processes and help people work better and smarter, often barriers in the form of cultural, organisational and behavioural changes are stifling.

As McAfee points out, it’s in this ever-changing technology context that management is being pressed more than ever to rethink the boundary between (i) control -> dictating how things will be executed and by who and (ii) autonomy -> allowing people to organise themselves and seeing what emerges. Frederic Baud explores similar themes in his interesting post Will Enterprise 2.0 ever enter big organisations? More particularly, he considers whether an organisation viewing itself as an internal market where resources can freely recombine to pursue emerging projects can greatly augment the output by loosing control of the nature of that output. The ensuing discussion is also worth a read!

In any case, the ‘control’ model prevails in many orgaisations, where decision-making processes are closed or simply pay lip-service to employee involvement, the few decide for the many based on their view of what people want, and networking of information and expertise occurs in very localised instances.

Yet when we look around for examples of successful businesses to emulate, who do we look to? Google? Proctor & Gamble? Toyota? Hubbards? Headshift 😉 ? There are plenty more. And what do they tell us? Well, to quote Eric Schmidt – Google CEO (The Mckinsey Quarterly November 2008):

There’s a lot of evidence that groups make better decisions than individuals. Especially when the groups are selected to be among the smartest and most interesting people. The wisdom of crowds argument is that you can operate a company by consensus, which is, indeed, how Google operates. …

One of the things that we’ve tried very hard to avoid at Google is the sort of divisional structure and the business unit structure that prevents collaboration across units. It’s difficult. So, I understand why people want to build business units, and have their presidents. But by doing that you cut down the informal ties that, in an open culture, drive so much collaboration. If people in the organization understand the values of the company, they should be able to self organize to work on the most interesting problems. And if they haven’t, or are not able to do that, you haven’t talked to them about what’s important. You haven’t built a shared value culture.

For me, those views are examples of organisational learning theory in practice. I’ve described the themes within that theory before, and for present purposes would just like to reiterate a couple of those themes:

Learning requires challenging existing mindsets that form the basis of (possibly out-of-date) behaviour.

Managers should encourage the generation and spreading of new ideas and practices about purpose, values and vision.

That vision requires the maximum number of people to contribute to and share a picture of the where the organisation is going, and how personal and business goals coincide.

Feedback is central to this system as it is critical to learning and adaptation.

Those ideas have been around alot longer than much of the technology that has caused such radical change to the way things are done in the public domain. That same technology is steadily entering and disrupting the way things are and can be done in organisations. But for that technology to be of real value, progress needs to occur simultaneously in respect of each of those ‘organisational learning’ elements. And if you’re reading this thinking that this type of change doesn’t apply to your business or your industry sector, best you start with #1 on that list.